Are you considering investing in rental property in Nashville in 2023? You’re not alone. Nashville’s real estate market has been booming in recent years. With the city’s growing population and strong economy, investing in rental property here can be a wise financial decision.
Nashville is a city that offers a unique blend of Southern charm, culture, and entertainment. These have evidently attracted many new residents in recent years. Its population growth has been consistent, at 2.04% in 2020 and 1.84% in 2021. In 2022 alone, the metro area population of Music City increased by 1.73% compared to 2021.
Additionally, the city has a strong job market with a diverse range of industries, including healthcare, music, and technology. All of these factors make Nashville an attractive place to invest in rental property.
Whether you are a seasoned real estate investor or a first-time buyer, this guide will help you make an informed decision on where to invest in Music City. So, let’s dive in and explore 2023’s best places to buy a rental property in Nashville.
Factors to consider when buying a rental property in Nashville
In investing in rental property, it’s important to do your due diligence. Keep in mind the following to help determine the potential success of your investment.
Location
The location of a rental property is one of the most important factors to consider. A property located in a desirable neighborhood, with easy access to public transportation, good schools, parks, and entertainment, is more likely to attract renters and provide a good return on investment (ROI). Additionally, neighborhoods that are experiencing growth and development may offer opportunities for appreciation in property value over time.
Price
Another important factor to consider is the price of the rental property. Investors should consider the purchase price, as well as any renovation or repair costs, and weigh them against the potential rental income to determine if the investment is financially viable. It’s important to work with a real estate agent or financial advisor to understand the market and make sure you’re getting a fair price for the property.
Rental demand
The demand for rental properties in the area is also a critical factor to consider. Research the local rental market to determine the average rental rates and vacancy rates in the area. A high demand for rentals and a low vacancy rate mean your property is more likely to stay occupied and can provide a steady stream of income.
Potential return on investment
Finally, investors should consider the potential ROI of the rental property. This involves analyzing the expected rental income and expenses, such as property taxes, maintenance costs, and mortgage payments. A good ROI means that rental income will exceed expenses and provide a positive cash flow.
Top 5 best places to buy a rental property in Nashville
Based on the factors discussed above, here are the top 5 neighborhoods or areas in Nashville that are recommended for buying a rental property.
East Nashville
Located just across the Cumberland River from downtown, East Nashville has become one of the most popular neighborhoods in the city. The area is known for its trendy restaurants, bars, and coffee shops, as well as its historic homes and tree-lined streets. The rental market in East Nashville has a high demand for housing and a low vacancy rate. The following are the average rent prices in the area:
The Gulch
The Gulch is a trendy, upscale neighborhood located in downtown Nashville. It’s known for its luxury apartments, high-end shopping, and gourmet restaurants. The rental market in The Gulch is strong, with a high demand for luxury housing in the area. As of March 2023, the average rental price in the area is around $2,454 per month.
Germantown
If you’re looking for a historic neighborhood, Germantown is the place for you. The neighborhood’s streets are lined with beautiful Victorian-era homes, many of which have been restored and preserved to reflect their original architectural styles.
In addition to its stunning architecture, Germantown is also known for its vibrant culinary scene, with numerous restaurants, cafes, and food trucks serving up everything from classic Southern comfort food to global fusion cuisine. The neighborhood is also home to a number of art galleries and cultural institutions.
The average rent in Germantown is around $1,819 per month.
12 South
Known for its vibrant energy, charming streets, and unique shops, 12 South is a popular destination for locals and visitors alike. The neighborhood is home to a variety of locally-owned boutiques, specialty stores, and eateries, ranging from trendy clothing stores to vintage record shops and from gourmet coffee shops to award-winning restaurants.
12 South is also a great destination for those looking to enjoy the outdoors. It’s home to Sevier Park, which features a playground, tennis courts, and a popular farmer’s market. The park is also home to the annual Sevier Park Fest, a popular community event that showcases local music, art, and food.
Overall, 12 South is a vibrant and dynamic neighborhood that offers something for everyone. This makes this location one of the best places to buy a rental property in Nashville.
Sylvan Park
Sylvan Park is the perfect neighborhood for families seeking a peaceful and convenient community. Located just a few miles from the bustling heart of Nashville, the neighborhood has a distinctly relaxed and friendly vibe. Residents and visitors alike enjoy strolling the streets, chatting with neighbors, and taking in the area’s peaceful ambiance.
Sylvan Park is also home to a number of popular restaurants, cafes, and shops. In the summer months, the neighborhood comes alive with the popular Thursday Night Out event, which features live music, food trucks, and family-friendly activities. The combination of these great features attracts single-family renters looking for long-term homes.
Up next: A guide for property owners on renting in Nashville
Final thoughts
There you have it for some of the best places in 2023 to buy a rental property in Nashville. Remember that investing in rentals can be a great way to build long-term wealth and generate passive income. But, carefully consider factors like location, price, and rental demand, which can impact the success of your investment.
When investing in rental properties, it’s essential to do your own research and work with a real estate professional who understands the local market. By taking the time to understand the local rental market and considering the key factors discussed in this blog post, you can make smart investment decisions and achieve your financial goals.
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